Across several businesses, especially in restaurants, equipment financing has become the popular funding option. Contrary to what a few business owners might believe, it does not involve making payments on newly purchased equipment. Instead, it involves using the existing equipment as collateral for securing the loan or funding. Continue reading the post if you wish to know more about Restaurant Equipment Finance Options to Choose From and whether or not it is good for your business.
Restaurant equipment financing is not as exclusive as others might consider, as it has already used several of them across this industry. Business owners are taking advantage of the new financing opportunities and booming. There are new ways to fund equipment that are discovered daily. Establishing new restaurant businesses is looking for great ways to use equipment leasing that benefits the company.
But, you have to answer some questions on whether restaurant equipment financing will benefit your new business.
Why opt for Restaurant Equipment Financing?
Restaurants are on the lookout for equipment loans for varied reasons. But, it is important to know when this type of loan will get approved.
One of the several reasons involves replacing old equipment that stopped functioning. The other reason is to look for the kind of loan that can help expand your business operations. In this case, the equipment requirement should have the ability to increase production as it is important to become specific regarding this before applying since the lender will like to understand the requirements first. you can also qualify for deferred payments for three to 6 months so you dont have to start making your payments right away.
How Does Equipment Financing Work?
The value of the loan is used for purchasing your restaurant equipment while searching for equipment financing. It is for a huge range of purposes that general business finances are being used, and equipment finance is used only for business equipment.
The equipment purchased is used as a security against the loan, and it is one of the major drawbacks of equipment financing. The lender offers the amount for purchasing the equipment at the pre-defined terms and conditions. These are the terms, including the details regarding the periodic payments and the principal and interests under a fixed term. Failing to make these monthly payments results in the lender reclaiming the equipment, and they can even sell them to recover the losses.
Benefits of restaurant equipment financing
The following are the seven major reasons to check out the restaurant Equipment Finance Options to Choose from for your business:
- Easy on the cash flows
The companies can acquire assets without investments over a large sum of capital upfront under equipment financing. The cost of the equipment gets spread out over their lifetime while it is equated to monthly lease rentals and installments instead of making it easier on the pocket for businesses to recover from the aftermath of the nationwide lockdowns.
- No dilution in ownership
Equipment and machinery are important to make sure of seamless business functioning. Equipment financing offers access to the funds required to ensure that the ownership of the asset remains with your business leaving you under complete control of your business operations.
- Maintain debt-raising capacity
After the uncertainty followed by the COVID-19 pandemic outbreak, the entire course of business and the economy in the upcoming months are unpredictable, with companies who should keep these options open while withstanding the uncertainty. It is given that equipment financing involves no additional collateral, your balance sheet, and any residual assets that stay unencumbered. This financing ensures that your future debt is raising its capacity to not get impacted.
- Enhance productivity
Each company needs to aim at enhanced revenue and regain the lost business without affecting the operations of the business under the recent scenario. The latest technological advancements need to get leveraged with greater efficiencies to secure the company’s future. Restaurant equipment financing can aid you in making these wise investments under limited upfront capital, enhancing business productivity, and resurrecting business practices. Trust Capital offers the best equipment financing options available in the market, with its extensive reach and several OEM partnerships.
- Surplus reserves to meet contingencies.
It can help preserve the surplus liability for cashing out to meet unforeseen circumstances whenever a business is getting equipment finance. The reserve will help you increase the availability of contingency funds for the distinctive anticipated events.
- Tax Savings
As the financial year ends, tax planning is a high priority for several businesses. Equipment finance and leasing offers varied tax benefits to such firms. The lease rents being paid are tax-deductible and can help to reduce the entire taxable income. These are the savings that get invested further into scaling up the enterprises. Reaching out to tax experts can help you avail of step-by-step guidance on tax planning for your business.
- Safeguard against inflation and obsolescence
Equipment finance can help to safeguard long-term investments against price rises. Whenever you are locking the long-term lease or financing options, you can easily secure your business against any potential cost increase. These are the savings that generally help you to reduce the cost of every unit while improving the margins. Some companies can acquire the extra savings to help run their operations smoothly.
Furthermore, with technological advancements growing rapidly, and if the machine is becoming obsolete, the lease might help safeguard the business from technical obsolescence. Companies can easily terminate the lease while upgrading their assets periodically to start operating on the current machinery.
Reasons for restaurant equipment financing
- Faster Investment
Without any funds, bringing an idea up from the concept of reality is quite tough. There is no way to buy equipment that will help implement the ideas. Each restaurant startup involves finance to aid the growth of the new business.
The restaurants are fast; one day, they become a product of someone else’s imagination in a year or two, as they might have 50 or more employees. The new businesses are smaller and can quickly progress, while the restaurants can progress faster with some financial assistance.
Restaurant equipment financing allows you to grow your business quickly instead of gradually over time. Financial freedom allows you to explore innumerable ventures that take your business to the next level. Spending money on marketing, hiring good people, and leasing equipment.
- Credit Requirements
The restaurants, normally like the other companies, need to meet a few specific credit requirements while applying for the equipment loan.
The following are the requirements involved:
- An active business entity with the secretary of the state or the business licenses
- Personal unguaranteed required from every owner
- A minimum credit score of 600
- The past 7 years show no bankruptcy
- No tax liens left unresolved
- Continue Company Growth
For a new business, growth is highly important. Growth within the first five years can make or break the restaurant business. Keep restaurant growth in mind whenever you are financing your equipment.
Whenever you are growing faster than what you are funding, being a business owner often means that there is an immediate need to slow the growth rate or find a solution to stay at this momentum. It is possible only after you know about the Restaurant Equipment Finance Options to Choose From. Continuing with this momentum is important and is possible with the help of
Example for a restaurant equipment loan
Trust Capital offers a massive array of equipment finance loans to restaurant business. The application process is the easiest; therefore, it is easier for the restaurant owners to help to keep their momentum growing. In our industry today, we are equipped with the best restaurant program equipment financing. You can get qualified for up to $75,000 with rates that start from 9% on terms of about 60 months with $0 down payments.
It is a special program that involves the following:
- FICO score of more than 600
- A minimum of 5 active trade lines showing on your credit project
- 2 years of experience in the industry
- No delay with the payments
- No bankruptcies of any kind.
- 50% of the loan value installment debt history on your personal credit history
You are eligible for $75,000 worth of an equipment loan if your restaurant business has all the factoids we have mentioned, and it depends entirely on the kind of equipment you plan to avail for your business. Using online brokers can help restaurants with loans across different banks for varied pieces of equipment.
These online lenders even have a heavy restaurant equipment loan program, and with just a simple one-page application, you can qualify for $150000 with rates that start at 7% on the terms of 60 months with zero down.
There are other programs for restaurants, too, such as the entire financial package program that qualifies you for millions of dollars. We can even get into a credit program to help you with millions of dollars.
It is the money that allows you to continue your momentum. Financing equipment for the restaurant is not a tricky affair, as some would make it out to be.
Equipment loans impact your credit.
The new business owners are often under the impression that the equipment loan harms their lines of credit; however, it is a misconception. There is no link between an equipment finance loan and your credit, and you will never check out any debt towards your credit reports. It is a loan that is entirely independent of personal credit.
Having the knowledge on restaurant equipment finance options to choose from can help to alleviate this whenever you invest in your business, as there is always a risk involved. You need hard collateral without the requirement for it to impact your credit, there are o upfront fees involved and you can acquire this equipment for your new business easily. You are free to invest in your business without any personal burden with restaurant equipment finance.
Knowing the best restaurant equipment finance options to choose from for your company is surely beneficial, considering the arguments we have mentioned above.
It means providing your business with fast continuous growth without the risk of damaging your credit. It’s cost-effective and makes your company successful faster.
It appears that offering your business rapid continuous growth without the risk of damaging your credit is the cost-effective option that makes your company fast and successful.
Trust Capital offers restaurant equipment finance solutions rapidly, irrespective of their current financial status. The team believes in development and progress, which is why it built a company around equipment finance. Restaurant equipment loans are constantly evolving and changing as it is time for your company to grow and join the modern business market.